Tax Credit Decision - self employed discrepency in earnings

DOVE_2

Have just received the tax credit decsion through for 11/12 and they have calculated that we were overpaid (and thus owe) £2,376.

We were made reduntant at the start of 2011 and thus our earnings for 11/12 were estimated as we were going self employed. we had continually updated hmrc as our earnings increased however the last figure we gave them was £8k, our actual earnings (although still estimated as need to do tax return) that i put on renewal form were £14k. There is a difference 6k which is where they are saying we need to make the repayment.

I have to say my understanding was that if there was a discrpency in earnings of less than £10k it was disregarded.

can anybody advise?

Many Thanks.

Icequeen99

The £10,000 disregard only applies if income rises between years, not in the same year.

So if your 11/12 income was more than your 10/11 income, then you could apply the 10,000 disregard.

You can't apply it between an estimate of 11/12 income and your actual 11/12 income. So if your income was actually 14,000 and that figure is lower than your 10/11 income they are right to use it.

However, you should have told them it was only an estimate, and you then have until 31 JAN 2013 to report the actual.

IQ

DOVE_2

Thanks IQ

yep income 10/11 was pre redundancy so was about £30k, then gave hmrc an estimated figure for 11/12 - £8k

If our earnings then for 12/13 end up being £21k we will be allright because of £10k disregard - is this correct?

Many thanks for your help.

Icequeen99

DOVE wrote: »

Thanks IQ

yep income 10/11 was pre redundancy so was about £30k, then gave hmrc an estimated figure for 11/12 - £8k

If our earnings then for 12/13 end up being £21k we will be allright because of £10k disregard - is this correct?

Many thanks for your help.

Yes, because your 12/13 award should be based on your 11/12 income of £14,000.

Then when 12/13 is finalised, they will compare 12/13 actual with 11/12. If that is 21,000, then they will use the 14,000 from previous year.

You should still tell them of your estimate, otherwise your 13/14 provisional payments might be too high.

IQ